iPhone X and component shortages its performance was overshadowed.
Gartner also expects strong demand for the iPhone X to bring a delayed sales boost for the U.S. company in the first quarter of 2018.
"We expect good demand for the iPhone X to likely bring a delayed sales boost for Apple in the first quarter of 2018".
Apple iPhone sales fell five per cent during the fourth quarter of 2017, compared to the same quarter in 2016.
In terms of smartphone vendors, Samsung maintained the top position, despite a fall in unit sales. It also says Xiaomi's "competitive" portfolio accelerating its growth in the emerging APAC market and helped it win back lost share in China. Huawei ranked number three in this list with 40.8 million units sold during Q4 2016 and saw an increase up to 43.8 million units for Q4 2017.
The report said Xiaomi's biggest market outside China is India.
Samsung is set to announce the successors to its Galaxy series of smartphones at the Mobile World Congress (MWC) in Barcelona over the next weekend.
Android retained its lead position in the smartphone operating system market at 86 percent, up 1.1 percent from 2016. iOS is a distant second at 14 percent, down 0.4 percent from a year ago. The other strategy of Xiaomi should be in increasing sales in Indonesia and other developing telecom markets in emerging APAC in order to position it as a strong global brand.